What are we seeing from the travel agencies is that there are plenty of cancellations and deferment of bookings? You are not the only one in this conundrum. This is inevitable as the whole world is suffering from this pandemic.
So, make a plan with your team to deal with the business downturn?
If your income is going to be down by 50% over the next 3 months, and staff costs are 50% of your income, you can not reduce costs enough to break even. You will need funding.
You need to implement several measures to survive.
1. Prepare a budget and cash flow forecast. 2. Talk to your bank about short-term funding. 3. Reduce costs where you can. 4. If you can use the opportunity and resources that you have, to develop and sell product that your clients will buy. 5. Use the opportunity to review internal systems and streamline processes.
For most travel businesses, their biggest expense is staffing. Discussing options with your staff to work on a 3 or 4-day weeks until the situation improves.
Request staff to take their holidays now and for those who do not have any holidays to take unpaid leave if they can afford this.
Shareholders and stakeholders need to reduce their own salary to just cover their basic living costs
You will need to put in place funding to last for at least 3 months. The banks are sympathetic to this situation.
You probably know which clients travel can be deferred for later - advise your clients… Keep them informed…
Most operators have seen these downturns before with SARS, the GFC and even 9/11 so cast your mind back to those events and how those situations were managed and survived.
Remember that departures from NZ over the past 10 years have risen at an average of 5.4% p.a. the lowest increase was in 2013 which was 1.1%.
When the virus is dealt with, there will be a huge surge in bookings.